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In this week's bottom line - 24 August 2021

In South Africa, August is Women’s Month. We look at four brilliant women in leadership positions at four JSE-listed companies.

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south african markets
Contributed by Gielie Fourie

Consumer price inflation, as measured by the annual change in the consumer price index (CPI) slowed to 4.6% in July compared to the 4.9% reading in June. The July figure was forecasted at 4.7%. This will influence interest rate decisions by the South African Reserve Bank (SARB). While the CPI is backward looking, the SARB is forward looking when it comes to interest rate decisions. The SARB is unlikely to raise interest rates soon. The inflation reading in July indicated that flat food prices and a slowdown in fuel price increases was enough to offset the sharp rise in electricity tariffs. According to Stats SA, municipalities would typically increase service charges in July every year. This is in line with our municipals’ financial year. Hikes for electricity were higher in 2021 than in 2020. Electricity prices rose by 13.6% in July. The fuel price hike of 91c/l will likely increase the annual rate of fuel inflation to 20% year-on-year, which will likely add inflationary pressures in the coming months.

Annual retail sales growth slowed to 10.4% in June, down from 16.3% in May. The figure is slightly higher than the market’s expected 9.2%. The increase was mostly seen in the ‘general dealers’ category. On a month-on-month basis, retail sales increased by 0.6% after a 2.3% reading in May. The reduction can be attributed to South Africa moving to level 3 and 4 lockdowns as Covid cases continued to escalate. For the year to date, retail sales increased by 12.8%. The outlook for consumer spending remains uncertain. Consumer spending continued to recover from last year’s disaster, supported by low interest rates and income growth. This suggests that household spending still made a positive contribution to GDP, even though the contribution is likely to have moderated compared with the higher-than-expected rise in the first quarter. Consumer confidence will probably be lifted by some progress on the vaccination drive which could reduce the chance of prolonged high levels of lockdown restrictions. However, the spending ability will be dampened by subdued employment prospects and higher prices, particularly of basic goods such as food, electricity and water.

Wholesale trade sales increased by 10.3% year-on-year in June. This is a slowdown from the 31.3% increase seen in May, attributed to an unwinding of the base effect of unusually low activity last year. However, on a monthly basis, seasonally adjusted sales were also subdued, falling by 5.1%. Motor trade sales, in current prices, increased by 16.6 % year-on-year with fuel sales contributing the lion’s share by rising 35.9%, yet on a monthly basis motor trade sales decreased by 3.7%. Pronounced base effects are likely to filter out as the hard lockdown data fades out, while high unemployment figures will continue to dampen wholesale trade sales.

south african markets
Contributed by Ingrid Breed

Leading Business Cycle Indicator, due Tuesday 24 August. The composite leading business cycle indicator, which leads economic activity by around six months and provides insight into expected future economic and business conditions, is expected to have increased 1.8% month-on-month in June 2021, down from the 2.3% increase recorded in May. A slowdown in growth is expected as the Covid-19 related base effects begin to fade.

Unemployment Rate, due Tuesday 24 August. The unemployment figures for the second quarter of 2021 are expected to reflect a dismal picture with the jobless rate likely to have remained at record highs. Unemployment is anticipated to remain at/or near record highs for the remainder of the year as a result of the slow economic recovery. The number of unemployed persons is forecast by some economists to have risen to as high as 7.25 million in the second quarter of 2021 (up from 7.2 million in the first quarter), pushing the unemployment rate up to 35% (up from 32.6% in the first quarter).

Producer Price Index, due Thursday 26 August. Producer inflation is anticipated to have remained relatively high in July although down slightly from the 7.7% year-on-year increase recorded in June, the highest producer inflation reading since February 2016. The upward pressure on producer prices is expected to have resulted from higher fuel, chemicals and other commodity prices as well as a weaker rand while being partially contained by softer increases in fresh produce prices. Consensus forecast is that producer inflation was 7.1% year-on-year and 0.7% month-on-month in June, down from 7.7% and 0.8% in May.

Mining Production, due Monday 30 August. The mining production figure is likely to show that June recorded its fourth straight month of rising mining activity as a result of continued recovery from the Covid-19 shock. The consensus forecast is that mining production increased 22.5% year-on-year and 1% month-on-month in June up from an annual gain of 21.9% and a 3.5% monthly contraction in May.

global trade
Contributed by Nick Downing

Commodity prices are booming. The S&P GSCI composite commodity index has almost doubled over the past 12 months, powered by increases across oil, metals and agricultural commodities. The price gains are attributed to the reopening of economies and pent-up demand, fuelled further by massive fiscal stimulus. Investors are also drawn to commodities due to their natural hedge against rising inflation risks and to their hedge against the potential for US dollar weakness. Copper has captured the attention of the investment community over the past week after breaking above its previous all-time high recorded in 2011 during the commodity “super-cycle”, which was led by China’s rapid industrialisation. While copper and other metal prices are showing the characteristics of another super-cycle, most economists are sceptical as China is transforming from an investment-led to a consumer-led economy. However, other economies are taking up the baton helped by extravagant infrastructure spending plans and the race towards a net zero carbon footprint within the next 30 years. The mass adoption of renewable energy and electric vehicles will lead to a step change in demand for copper and other key “green” metals. Meanwhile, the hangover from the last super-cycle means mining companies have been reluctant to develop new capacity. Due to the extended period taken to develop new mines, the existing supply constraints may last several years and potentially squeeze commodity prices even higher. Ivan Glasenburg, CEO of Glencore said the copper price needs to rise another 50% from current levels to unleash the new capacity required to meet burgeoning demand forecasts.


north america
Contributed by Nick Downing

The closely scrutinised minutes from the Federal Reserve’s policy meeting on 27-28th July reveal a growing discussion on exiting the $120 billion per month asset purchase programme. The “quantitative easing” (QE) programme was implemented as an emergency Covid relief measure. According to the minutes, “Most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year.” The evolving consensus is that “tapering” of the Fed’s QE programme would begin before year-end although some members of the Federal Open Market Committee still favoured the start date to be early next year, citing continued slack in the labour market and the Covid Delta variant. The key decision makers are Fed Chair Jay Powell, Vice Chair Richard Clarida and New York Fed Governor John Williams. They tend to be more “dovish”, tilting towards a gradual QE exit. While the starting date was discussed, there was little discussion of the pace of asset purchase withdrawal or its composition. Some economists argue that the pace should be faster than the last taper in 2013-14 as the economy is now far stronger and that tapering of mortgage-backed securities should precede Treasury bonds due to concerns that the residential property market is over-heating. The assumption is that the reduction of Fed purchases would cause bond yields to rise in turn affecting mortgage interest rates. Financial markets are eagerly anticipating Powell’s speech on the 27th August at the annual central bankers’ conference at Jackson Hole. Fed Chairs have in the past sometimes used the platform to announce significant policy shifts.

Following the unexpectedly sharp decline in US consumer confidence published by the University of Michigan, July’s retail sales dropped by 1.1% month-on-month, attributed to wariness over the Covid Delta variant and a switch in spending from goods towards services. Services such as travel, entertainment and recreation are not included in the retail sales data. There has also been a sizeable decline in auto sales. Excluding autos, retail sales fell by a milder 0.4% on the month. Changing consumer habits were illustrated in the 3.1% decline in online sales. Despite the pullback over the month, retail sales were still up in July by a massive 17.5% compared with February 2020, just before the pandemic struck. The outlook remains positive despite the expiry on 7th September of the government’s enhanced unemployment benefit programme. Households are sitting on around $2.5 trillion in excess savings, interest rates remain at historic lows and jobs growth is healthy. Job openings are at a record level and exceed the number of unemployed. Initial jobless benefit claims fell sharply in the week ended 14th August by 29,000 to a new pandemic low of 348,000. Consumer confidence and consumer spending are likely to recover their upward bias once the Delta variant is contained. Consumer spending is vital to US economic growth, contributing over two-thirds of US GDP.

Contributed by Nick Downing

Regulatory risk appears to be gaining momentum. In the past week, the government’s Central Financial and Economic Affairs Commission has decreed the need to address income inequality and to actively pursue “common prosperity for all.” In the same week, the State Administration for Market Regulation, has published new rules to combat antitrust behaviour, aimed primarily at the internet and e-commerce sector. These initiatives follow recently legislated restrictions on the education sector and attacks on internet gaming. As a result, China’s equity market has been one of the world’s worst year-to date performers, with the mega-cap technology stocks especially affected. Tencent shares have dropped by 40% since the start of the year. However, it may not be all bad news. Antitrust rules are aimed at promoting healthy competition and innovation, which should benefit productivity and wealth creation over the longer term. Meanwhile, the decree of “common prosperity for all” should benefit household consumer spending, which so far has been a missing link in China’s post-pandemic recovery. As the nation increasingly transitions from an investment and export driven economy to one that is more mature and driven by consumer spending, a less uneven dispersal of household wealth would benefit GDP growth. Regulatory restrictions may continue to hamper equity market performance for one or two quarters, but the longer-term attractions of China’s market remain as compelling as ever.

japanese markets
Contributed by Carel la Cock

Japan’s private sector business activity continued its decline in August, pulled down by its services sector as the Delta variant of the covid-19 virus caused an extension to the state of emergency implemented in major cities. The latest Jibun Bank Flash Japan Composite Output Purchasing Manager’s Index (PMI) reading of 45.9 for August was sharply down from the 48.8 final reading printed in July, indicating a steeper deterioration in private sector business activity. The Jibun Bank Japan Manufacturing PMI showed that the sector expanded at a marginally slower rate with a reading of 52.4 in August compared to 53.0 the month before. Although the key take away is that the manufacturing sector remains in good health despite the surge in covid-19 infections and the continued strain on supply chains. New order growth saw an increase in the month, but output growth softened from July. Optimism for the year ahead remains resilient and encouraged employers to increase staff levels. The larger services sector decreased at a faster pace than in July. The Jibun Bank Flash Japan Services Business Activity Index fell to 43.5 in August from 47.4 in July marking the nineteenth consecutive monthly (sub-50) contraction while also contracting at the fastest pace in over a year. New business suffered due to lockdown measures while export demand also deteriorated. Yet sentiment remains positive for business conditions in the year ahead despite current sentiment being at the weakest since the start of the year. Despite the deterioration in current business conditions the potential for a sharp rebound given the high level of household savings remains intact. Last year Japanese households saved a generous 11.4% of disposal income and in the first three months of this year savings amounted to 8.7%. Once lockdown measures are lifted and households can resume their normal spending habits, a consumer led recovery could see the economy rebound sharply in the fourth quarter.

euro european markets
Contributed by Carel la Cock

Private sector business activity in Europe remained at near record levels and marked another impressive monthly increase. The IHS Markit Flash Eurozone Composite PMI eased from a 15-year high of 60.2 in July to 59.5 in August. Service sector activity continued its recovery and expanded at a faster rate than manufacturing for the first time since the easing of lockdown measures. Manufacturing output growth remains hamstrung by deteriorating access to inputs while new order flows remained solid. The Flash Eurozone Manufacturing PMI and Output Index eased to 6-month lows, impacted by input constrains and lengthy supplier delivery times. However, rates of expansion remained at near record highs. Optimism for the year ahead was within the highest levels ever recorded, leading to firms expanding their capacity by hiring new staff and expanding employment at near record levels. The trend of growing backlogs of work eased in August because of the increased capacity but was commonly cited as a reason for supply shortages and together with surging demand drove input costs higher. In most cases the increases in costs were passed on to customers as selling price inflation was the third highest in the last two decades. Germany continued to lead the European nations despite softening from the record levels seen in July, especially in manufacturing that was again slowed by supply constraints. Business activity in France eased to a 4-month low held back by manufacturing output due to input shortages and softer growth in the services sector. The rest of the region experienced growth at the fastest rate in 21 years as both manufacturing and services rebounded strongly. According to Chris Williamson, Chief Economist at IHS Markit, “The concern is that we are seeing some upward movement on wage growth as a result of the job market gain, which could feed through to higher inflation.”

uk markets
Contributed by Carel la Cock

The UK private sector output growth has hit a 6-month low, hampered by the availability of staff and manufacturing inputs. The IHS Markit/CIPS Flash UK Composite Output Index at 55.3 fell markedly from the final figure of 59.2 in July but remains well above the neutral 50-level. However, there is concern that the latest figures point to a further loss in momentum caused by delays in rebuilding capacity to deal with a surge in demand. Backlogs of work increased for a sixth consecutive month while shortages in staff and raw materials persisted at record levels. New orders remained buoyant and improved export sales helped offset slightly weaker domestic demand. Given the strong demand, rising backlogs and optimism about business conditions in the year ahead, private sector job creation grew at the fastest rate since records began more than two decades ago. Job creation was especially strong in the customer facing services sector where many furloughed staff were also brought back. Input price inflation eased in August, but many firms indicated that higher wages and shortages of raw materials will continue to exert pressure on input prices for the foreseeable future. Duncan Brock, Group Director at CIPS, warns “it’s likely that cautious consumers will continue to remain an obstacle for UK businesses until full confidence returns.”

Contributed by Carel La Cock

Asian countries are seeing a broad-based economic expansion according to the latest IHS Markit Asia Sector PMI figures. Of the 18 sectors being tracked, no less than 16 increased output in April and 13 indicated higher employment levels. Automobiles and Auto parts saw the quickest growth and maintained the momentum gathered in the last three quarters. Other manufacturing sectors such as chemicals, technology equipment, machinery and equipment and household and personal use chemicals all showed promising growth, outpacing the gains made in March. The April reading of the IHS Markit ASEAN Manufacturing PMI figures also showed a steep rise in output and new orders. Vietnam reported the best growth of the ASEAN nations with their PMI hitting a two and a half year high followed by Indonesia which hit a record high. Business confidence across the region was the strongest in over a year. Service sectors also improved especially in healthcare, transportation, and industrial services, but their recovery is still lagging manufacturing. As the global economy continues to gather pace, the region is well placed to benefit from higher global demand and trade.

Y to D %
Market Indicators

JSE All Share

JSE Fini 15 

JSE Indi 25

JSE Resi 20




S&P 500


Hang Seng


FTSE 100



Brent oil

Y to D %

+ 12.49

+ 16.81

+ 6.56

+ 15.53

+ 2.94

– 1.01

+ 3.28

+ 19.26

+ 1.12

– 6.30

+ 1.12

+ 10.04

– 5.11

– 5.17

+ 33.05

















Contributed by Gielie Fourie

WOMEN’S MONTH: In South Africa, August is Women’s Month. We look at four brilliant women in leadership positions at four JSE-listed companies. There is a constant call for companies to appoint more women in leadership positions. We fully support this call. We look at four women who are making a valuable contribution to their companies These women are not “quota players” – they are all well qualified and are excellent leaders of their companies.

DR. LEILA FOURIE (51): The mountaineer and rock climber. We start with the CEO of the JSE, Leila Fourie. Leila’s business career spans more than 25 years working in consulting, investment banking, retail banking & capital markets in South Africa and Australia. She studied at Wits University. She received a doctorate from the University of Johannesburg. Before moving to Australia, she served on the board of the JSE as an executive director. In Australia she served as executive responsible for consumer finance at the Commonwealth Bank of Australia, Australia’s biggest bank. She returned to South Africa to join the JSE again, this time as CEO of the biggest stock exchange in Africa and the 17th biggest in the world. She is an experienced, and fearless, mountaineer and rock climber.

NATASCHA VILJOEN (51): The gold miner’s daughter. Her father worked as a shift manager at a mine in Klerksdorp, and she often went with him to work. Today she is the CEO of Anglo-American Platinum, the biggest platinum mine in the world. She matriculated from Hoërskool Klerksdorp in 1987. Natascha is a metallurgical engineer. She holds a B Eng degree from the North-West University, and an Executive MBA (cum laude) from the University of Cape Town. In 2019, Natascha was recognised by the international organization, “Mines & Money”, with the “Unsung Hero” award, for her work on Coarse Particle Recovery technology.

MPUMI MADISA (41): The jogger. In 2019 Mpumi became the CEO designate of Bidvest. When management broke the news to her, she nearly fell off her chair. She was the first black female to be appointed CEO of a JSE top 40 company. She became the first woman to be appointed as CEO of Bidvest. She grew up in Sebokeng to the south of Johannesburg. After school at the Mondeor High School, she attended Wits University. She studied courses in mathematics, statistics and economics and obtained a M Comm degree in Finance and Investments. Her first job was at Hollard Insurance. She left after 18 months to join Prestige, a Bidvest subsidiary. After three years she left, but luckily, she later returned to Prestige. A few months later she was promoted to work for Bidvest at group level and was appointed to the Bidvest board. She fully took over the CEO role from then CEO Lindsay Ralphs in July 2020. To unwind and boost her metabolism, she goes for a six-kilometer jog every morning.

MAGDA WIERZYCKA (52): The disrupter from Poland. Magda is the co-founder of Sygnia. Today she is chairperson of Sygnia. She is known as a disrupter. She is also well-known, and feared, for her anti-corruption activism. She is a billionaire, the richest woman in South Africa. She was born in Poland. Forbes listed her among “Africa’s 50 Most Powerful Women”. She grew up in Poland where she shared a two-bedroom flat with her sister, brother, grandmother, and parents who were medical doctors. Her Jewish grandmother was a Holocaust survivor. With the economic collapse of Poland, she moved with her family to a Polish refugee camp in Austria where they lived for a year. Her parents were forced to dig ditches to earn a living. Her family moved to South Africa in 1983 when she was thirteen years old. The family settled in Pretoria, where she attended Pretoria High school for girls. She had to learn English and Afrikaans swiftly. She then attended the University of Cape Town where she graduated with a postgraduate diploma in actuarial science. She first joined Southern Life. She then joined Coronation in Cape Town, playing a pivotal role in building it to one of the biggest asset management firms in South Africa. Later she landed at Cadiz Asset Management. She then led a management acquisition of a part of the company that became Sygnia Asset Management, of which she became the CEO. In 2015 she listed Sygnia on the JSE. She serves on the Advisory Board of Harvard’s Centre for Africa Studies.

SUMMARY: Unfortunately, space does not allow us to discuss more female leaders. South Africa is blessed with several highly qualified and capable female leaders. At the JSE (the listed company) Leila Fourie is the CEO. But the chairperson and the CFO are also two ladies. Unlike the ladies in our cabinet, who are basically “quota players”, our ladies in the private sector can stand their ground anywhere in the world. Margaret Thatcher once said: “A lady is often the best man for the job”, and “If you want something said, ask a man; if you want something done, ask a woman.” In 1983 Ronald Reagan remarked: “Margaret Thatcher is the best man in England”.

*All writers’ opinions are their own and do not constitute investment recommendations or financial advice. Speaking to a qualified wealth and investment professional is crucial before making financial decisions.

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